Tag: meaning, objectives, importance and preparation of final accounts

Questions Related to meaning, objectives, importance and preparation of final accounts

All expenses account show ________ balance.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Debit

  2. Credit

  3. Zero

  4. Negative

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Correct Option: A
Explanation:

Expense account are classified as nominal account. As per the rule of nominal account, all expenses and losses are to be debited. 

Hence all expense account show the debit balance. 

All personal accounts show ________ balance.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. debit

  2. credit

  3. both

  4. none of the above

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Correct Option: C
Explanation:

Personal Accounts refer to the account of any person which includes artificial person also. Like account of Mr. Shyam, account of ABC & Associates, account of XYZ Pvt Ltd. 


All such personal account are having various business transactions of debit and credit. Hence, all personal account can either show debit or credit balance depend on the transactions. These are also known as sundry debtors and sundry creditors. 

Trading & Profit and loss account is also known as __________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Income Statement

  2. Revenue Account

  3. Fixed Statement

  4. None

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Correct Option: A
Explanation:

The term Trading and  Profit & Loss Account is normally used when the business organization are having the business of trading activity. 


The term Income & expenditure is used when the financial statements are prepared for professionals like, Chartered Accountants, Doctors, Advocates etc. 

Financial Statements are the branch of ____________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Book keeping

  2. Accountancy

  3. Both

  4. None

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Correct Option: B
Explanation:

Financial accounting is a specialized branch of accounting that keeps track of a company's financial transactions.

Financial statements are usually prepared at the _______ of financial year.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. End

  2. Beginning

  3. Middle

  4. None of the above

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Correct Option: A
Explanation:

To know the financial position of the business, financial statements are prepared. Normally the financial statements are prepared at the end of the financial year. 


Financial statements includes the following:

Trading, Profit & Loss A/c - To know the profitability of the business.
Balance Sheet- To know the position of assets and liabilities of the firm.
Fund Flow Analysis- To know the movement of fund during the year. 

If receipt imply an obligation to return money will result in ___________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Capital Receipts

  2. Revenue Receipt

  3. None

  4. Both

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Correct Option: A
Explanation:

Receipts can further be classified as revenue receipt and capital receipt. 


Revenue receipt are those which received against the supply of goods or services. Like receipt on account of professional services rendered by a Chartered Accountant. 

Capital receipt is an obligation to the business and to be return in due course. For example, loan taken from bank. 

Name the financial statements prepared by a business ______________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Trading account

  2. Profit and loss account

  3. Balance sheet

  4. All of the above

Show answer
Correct Option: D
Explanation:

Financial statements is a formal record of the financial activities and position of  a business, person or other entity. A business entity uses financial statement to communicate about its financial information with interested parties, includes investors and creditors. The purpose is to reveal the financial position of the enterprise, the result of its recent activities  and an analysis of what has been done with earnings. 

State whether the following statements are True or False:
Final Accounts are prepared on the basis of Trial Balance.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. True

  2. False

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Correct Option: A
Explanation:

Yes, the given statement is correct. 

A trial balance is a bookkeeping or accounting report that lists the balances in each of an organization's general ledger account (Accounts with zero balances will likely be omitted.) The debit balance amounts are listed in a column with the heading "Debit balances" and the credit balance amounts are listed in another column with the heading "Credit balances." The total of each of these two columns should be identical.
With the help of trial balance final accounts i.e., trading account, profit & loss account and balance sheet is prepared. Items of revenue nature shown in trading and profit & loss account and items of capital nature are shown in balance sheet.

Financial statements are prepared on the basis of _________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. actual events which have already happened

  2. anticipated events

  3. future events

  4. probable events

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Correct Option: A
Explanation:

Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. transactions and events of financial information. Transaction is prepared on the basis of actual events which have already happened.

______ is not available in the Financial Statements of a company.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Total sales

  2. Total profit and loss

  3. Capital

  4. Cost of production

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Correct Option: D
Explanation:

"Cost of production" is meant the total sum of money required for the production of a specific quantity of output. However, cost of production is not recorded in the financial statements of a company.